SLOVENIA

Republic of Slovenia

Republika Slovenije

COUNTRY OVERVIEW

LOCATION AND SIZE.

Located in southeastern Europe, bounded on the north by Austria, on the
northeast by Hungary, on the southeast and south by Croatia, and on the
west by Italy and the Adriatic Sea, Slovenia has an area of 20,253
square kilometers (7,820 square miles), slightly smaller comparatively
than New Jersey, and a coastline of 46.6 kilometers (29 miles). The
capital city, Ljubljana, is situated on the Sava River in the central
part of the country; the second major city is Maribor on the Drava River
in the northeast.

POPULATION.

The population of Slovenia was estimated at 1,930,132 in July 2001. At
the 1991 census, it was 1,962,606, giving it an overall population
density of 97 persons per square kilometers (252 per square miles). In
2001, the birth rate was estimated at 9.32 per 1,000 population, while
the death rate stood at 9.98 per 1,000, giving Slovenia a negative rate
of natural increase. In 2001, however, a positive population growth rate
was estimated, partly due to
immigration
from other former Yugoslav republics. Unlike many Eastern European
countries, Slovenia has not been seriously affected by economic
emigration
in the 1990s.

Slovenes, a Slavic ethnic group, constitute about 88 percent of the
republic's population; ethnic Croats (about 3 percent), ethnic
Serbs (about 2 percent), and several other ethnic groups (about 7
percent) constitute the remainder. Slovenian culture has been strongly
influenced by Austrian and German culture. Languages include Slovenian
and others, corresponding to the ethnic breakdown. Most Slovenes (about
69 percent) are Roman Catholics, with smaller numbers of Lutherans and
others. In the mid-1990s, Slovenia was home to some 20,000 refugees from
the war in Bosnia and Herzegovina. About 52 percent of the population
lives in urban areas, particularly in Ljubljana. The population is
aging, with 16 percent below the age of 14 and 19 percent older than 60.

The aging of the population was spectacularly illustrated by the success
of the Democratic Party of Slovene Pensioners (Desus) in the late 1990s.
Having entered parliament in 1996, this retiree party achieved a record
5.2 percent share of the popular vote in 2000, pledging to put off
pension reform. The Slovenian government has been consistent in its
commitment to supporting families and youth, yet unable to reverse the
aging trend, characteristic of Europe as a whole.

ECONOMIC SECTORS

Most major sectors reported growth in 1999. Industry constituted 35
percent of GDP in 1998. Agriculture accounted for a modest 4 percent,
although its contribution to the market value of products rose by 2.2
percent, and services were by far the largest sector in the economy with
61 percent of GDP and almost half of the
value added
to all commercial companies.

SERVICES

TOURISM.

Tourism is a significant source of foreign currency, accounting for
US$1.22 billion in revenue in 1996, a record for independent Slovenia,
but still far behind the results before 1991, when many more foreign
tourists visited its famous mountain resorts (around Lake Bled) and
coastal areas. The authorities have been somewhat slow in recognizing
the earning potential of that sector. Even now, opinions are divided on
this activity whose fortunes depend sometimes on circumstances beyond
the country's control. More recently the view has prevailed that
tourism deserves more support, given the potential in a country
combining an Alpine setting and a Mediterranean coast within a short
distance, as well as numerous places of historical and architectural
interest and broadly acclaimed health spas located in resort towns along
the coast.

Germans (782,128), Italians (537,412), Austrians (483,472), Croats
(212,676), Dutch (151,470) and British (135,269) made most overnight
stays in 1999. The government plan is to achieve some 9 million
overnight stays of foreign guests by 2005 in order to surpass the level
of nearly 8 million in 1990, but few in Slovenia are relying on a return
to mass-market tourism—which is rather unlikely, given the
overall decline of the industry in Europe and the country's
relatively high labor costs. Casinos, which bring in 30 percent of all
tourism earnings, will also be encouraged. But foreign involvement in
this sector has been limited so far, and some foreign tour operators
sometimes get a hostile reception by domestic firms.

FINANCIAL SERVICES.

With 25 banks, 6 savings institutions, and 70 commercial credit houses
at the end of 1999, Slovenia is considered to be rather over-banked. The
role played by financial institutions in the economy is in line with
other leading Eastern European transition economies but still lags below
levels found in Western Europe. The 3 largest banks, Nova Ljubljanska
Banka, SKB banka, and Nova Kreditna Banka Maribor, hold more than half
of the total banking assets, but are still state-owned despite
long-standing privatization plans. The Slovene banking sector has
avoided the calamities that have plagued other east-central European
countries. Slovene banks tend to be more profitable and efficient than
their counterparts there, but they are still behind those in the EU,
owing to a large extent to the lack of competition. Credit card
companies have been active throughout the 1990s, and their market is
steadily growing.

RETAIL.

Slovenia's retailers, especially the chains with near monopolies
in their regions, have been growing throughout the 1990s. Mercator, the
largest Slovene retailer, presently accounts for some 40 percent of the
entire
retail
sector, the structure of which is now much closer to that in Austria or
Switzerland than to Croatia or Hungary. There are also about 11,000
small stores, with an average size less than one-third of the European
average. About half of them have less than 5 employees, and sales per
vendor are less than 50 percent of the European average number. The
sector is considered ripe for consolidation and for heavy foreign
investment. The
arrival of heavyweight western-European retailers such as Interspar
(Austria) and Leclerc (France) has helped focus interest on
higher-volume and lower-margin sales. Competition from such large
chains, building hypermarkets (large supermarkets) with western European
standards of layout and service, will likely drive many of the smaller
retailers out of business.

In Slovenia, direct marketing is quite a serious business as many large
direct sales companies, including Amway, Avon, Tupperware, Golden
Neo-Life Diamite, Stanhome, Kirby (of the United States), and AMC (of
Switzerland), have established their presence. Some, such as Amway and
Golden Neo-Life Diamite, have direct representation in the Slovenian
market while others, like Avon and Tupperware, use independent agents.
Direct marketers complain, however, that their business is made
unnecessarily difficult by the many restrictive regulations. A reason
for this is the occurrence of many fraudulent
pyramid schemes
in the early 1990s, which has led to the annihilation of millions of
dollars in personal savings and has generated broad government
skepticism about direct sales, particularly multi-level marketing
ventures.

DEPENDENCIES

Slovenia has no territories or colonies.

BIBLIOGRAPHY

Hafner, Danica Fink, and John R. Robbins, eds.
Making a New Nation: The Formation of Slovenia.
Hanover, New Hampshire: Dartmouth University Press, 1997.